Does the DOW affect your trading?

[Mark T. Market]

Inspired by COM.

Not a simple yes or no. Pick any two options--one for DOW up and one for DOW down scenarios.

Of course, conflicting answers will just nullify your vote.

After expiry, we tally the results and we'll know how many bird-watchers are really checking on the DOW last night. We'll also know the sensitivity of the bird-watchers to an Up or Down DOW, and the level of indifference.

[ColorOfMoney]

After expiry, we tally the results and we'll know how many bird-watchers are really checking on the DOW last night.

This poll cannot prove this presumption. Because a person can vote that he is bearish or bullish, whether he is bird watching the Dow all night, or whether he gets the info at 9 AM when he wakes up and checked the internet. Meaning, the poll cannot tell who are bird-watching all night by simply saying he is bullish or bearish as the Dow.

We'll also know the sensitivity of the bird-watchers to an Up or Down DOW, and the level of indifference.

This one is more complex to discern. It depends on various factors that change from time-to-time, like if a person is heavily invested, or whether he is generally liquid at the time. Another factor is whether a person is a value investor, or a jittery tsupita daytrader. I believe the bullishness or bearishness feeling of investors in PSE, is positively correlated to the Dow by default. But this "feeling" doesn't automatically translate to a bullish/bearish trading move when the action starts (which is the substance of my inquiry in the other thread).

For example, if a person is heavily invested and already has incurred paper profits, such a person is fired-up for profit-taking move when he sees the Dow closing at an eyesore -250. If he is a tsupita, he is more likely to post a sell as early as pre-open to lock his profits.

A person who is 100% liquid, is often looking for a massacre. The more brutal the killing, the better. Depending on his general outlook, he would be having a bullish sentiment if he is in a buying mode despite a -250 Dow. An apocalyptic person is understandably bearish, and will stay liquid.

Another scenario: The Dow is -250. Two PSE guys are newly invested. We expect them to be bearish by default. I would suspect that both guys will simply wait and see how the sell orders are swelling up during pre-open. The jittery tsupita guy will expectedly join the suicide line and cut-loss in response at the opening bell. While the other bearish dude will just keep his fingers-crossed and try to max out his paper loss limit before committing suicide on his position. In both cases, what triggered their trading decision was the "volume" of the trend. Meaning, evenif they did not know what the Dow closing was last night, they would have made the same bearish move anyway, just by looking at the selling pressure. In this case, the Dow is a don't care element.

Another scenario: The Dow is up +350. By default, most people in PSE would be bullish for the day. The question now is: Will you buy the rally? And the dare-devil question is: Would you start a rally? The mavericks will usually post a buy at pre-open. Cunningly, we know they plan to sell later after a few flucs up. Most moderate-risk people will be contented with inserting themselves in the middle, if a rally does take place. In this case study, the Dow is a trigger for the gamblers to jump-start the bidding pressure. The resulting rally is actually fueled more by the trading volume. Therefore, for people participating in such a rally, the volume was the trigger. The Dow was just an FYI.

I'm sure there are many other scenarios, wherein the Dow is just a secondary contributor to our trading decisions.

[thecombination]

I'm totally indifferent to movements of the dow.

[econophysicist]

the statistics are beginning to tell me how to come up with a contrarian strategy

[whoelse]

am more concerned by US$ vs gold than DOW as the US$ to gold has direct correlation to the peso rate. which has impact on the mining stocks i trade and to the oil prices

[dragon]

i almost refused to vote, but voted
When the DOW is up last night, I am bullish today.

the question/poll answers suggest too much of a day to day basis kasi.
but the implication holds for me, that overall dow movements affect global movements

[Mark T. Market]

This one is more complex to discern. It depends on various factors that change from time-to-time, like if a person is heavily invested, or whether he is generally liquid at the time. Another factor is whether a person is a value investor, or a jittery tsupita daytrader. I believe the bullishness or bearishness feeling of investors in PSE, is positively correlated to the Dow by default. But this "feeling" doesn't automatically translate to a bullish/bearish trading move when the action starts (which is the substance of my inquiry in the other thread).

Complex indeed. But people are free to propose how to examine the topic.

For me the study will be indicative of trader bias which you are merely assuming (in the bold portion above). But empirical evidence will support or contradict the assumption--with the caveat that:

1. This is limited only to FMers (which are by no means the only traders out there).
2. This presumes they are not lying.

I also noticed that not everyone put in 2 votes--which is automatically 1 abstain vote. In the final tally I'll have to figure the abstensions as indicative of something, not necessarily indifference.

4 days to go.

[ColorOfMoney]

Dragz, you are bullish. But I bet you'll wait and see first if others are bullish too (when "they" decide to buy up stocks) .... and then you'll join in.

The thing is, if an elephant decides to dump-on-strength ... most bullish feelings (especially the small-timers like us) turn into bearish at midday to closing. As a result, the elephants decide what the correct feelings should be for the day. It's a dictatorial mood-changing force (manifesting as "volume") that doesn't care what your feelings are, whether bullish or bearish.

[whoelse]

a better poll perhaps would be instead of the DOW, the FM sentiment.

how the FMers take the sentiment in FM and how it affects the way they trade.

[ColorOfMoney]

posted by econophysicist:

the statistics are beginning to tell me how to come up with a contrarian strategy

Your contrarian strategy will only work when they finally make a move. It is possible that more than half of the bullish/bearish people are just anxiously waiting in the sidelines trying to discern how the action is coming along. The herd spirit within us, is strong no matter what the Dow is. We profit as a herd, we die as a herd.

[Mark T. Market]

a better poll perhaps would be instead of the DOW, the FM sentiment.

Could be, but we are left to define "sentiment" so everyone agrees what to measure/trigger.

Can it be:

- Number of bullish posts? (anyone counting?)
- Number of updated threads?
- Appearance of certain threads? (i.e. apocalypse, pour your emotions, etc.)
- Appearance of certain FMers on certain stock threads?

etc.

[cedricabisa]

We profit as a herd, we die as a herd. Smile

I think its slightly incorrect. Al pacino said in his locker room speech in "any given sunday" that either we win as a team or we die as individuals.... Thats in football but in our thing its different i believe. We die if we follow the herd and we live and profit if we go against them.

[ColorOfMoney]

Here's my assessment, without seeing how a poll of such will turn out:

- Number of bullish posts? (anyone counting?)

Could be:
1) The stock has skyrocketed: Bullish posts are simply cheering rahrah posts.
2) The stock is dead in the water: Bullish posts keep reminding of the stock's "fundamental" prospects either to a) prevent more shareholders from dumping their shares; and b) attract people to buy the stock by repeated marketing of fundamental numbers.

- Number of updated threads?

Could be:
1) The stock has skyrocketed: The thread is busy since people are wondering why the stock is climbing. Conspiracy theories fuel the life of the thread.
2) The stock is dead in the water: The thread is busy since people are wondering why the stock is plunging. Conspiracy theories fuel the life of the thread.
3) The stock is dead in the water: The marketing campaign intensifies to keep the stock relevant for possible new investors. Updating the thread regulary, is thus, a prime necessity.
4) The stock is dead in the water: The thread is busy from people who keep saying how happy they were for not investing in such garbage.

- Appearance of certain threads? (i.e. apocalypse, pour your emotions, etc.)

Could be:
1) The market is generally a flatliner: People have nothing else to do.
2) If market is bullish: The person posting on the thread was left behind and doesn't want to buy the rally.
3) If market is bearish: The person posting on the thread is stuck with paper loss and doesn't want to cut his position.

- Appearance of certain FMers on certain stock threads?

Could be:
1) A possible case of Stockholm Syndrome. In parapsychology, the appearance of these "certain" FMers could be motivated by the same reason why earthbound spirits continue to haunt a certain place like a mansion.